White House proposes changes to overtime rules



On Monday, June 29, 2015, the Huffington Post published an op-ed by President Barack Obama in which, among other things, he proposed to update overtime regulations to expand the number of workers eligible for overtime compensation.

Under current Fair Labor Standards Act (FLSA) regulations, only workers who earn less than $455 per week are automatically deemed to be non-exempt and therefore entitled to overtime compensation.* This equates to roughly $23,660 per year.

Under the newly-proposed regulations, this bar would be raised to $50,400 ($970 per week) in 2016, meaning that anyone who earns less than that amount could not be considered exempt from overtime compensation under the FLSA. According to President Obama, this change would impact approximately 5 million U.S. workers.

Importantly, this new rule would not require Congressional approval, although some question exists as to whether the new regulation might be challenged, either in court or in Congress. Business groups are opposed to the proposal; the National Retail Federation, for example, points out that these changes will "add to employers' costs, undermine customer service, hinder productivity, generate more litigation opportunities for trial lawyers, and ultimately harm job creation."

The Huffington Post article offers merely the first hint of the White House's proposals for overhauling FLSA regulations. Over the next few weeks, we may be provided with additional details, as well as additional proposals for changes to the U.S. wage-and-hour system. We will keep you apprised as this matter continues to develop. 

* Note: Where an employee earns more than $455 per week, that does not automatically mean that he/she is exempt from overtime compensation. It must also be determined that the employee meets the "duties test" by showing that the job duties performed in his/her position are exempt in nature.


If you have questions about this Employment Law Alert or wish to discuss the impact of this decision upon your business, please do not hesitate to contact Maury Nicely at Evans Harrison Hackett PLLC, 423/648-7851 or mnicely@ehhlaw.com.